Farmers could be making money out of the Government’s plan to see a billion trees planted during the next decade, says Forest Owners Association president Peter Clark.
It is estimated 100,000ha of land needs to be planted each year to meet the target, which will effectively double the country’s tree planting rate, says Peter. “NZ has the land capacity, but landowners need to be convinced that forestry provides a suitable return on investment.”
Peter’s analysis, based on data published by Beef + Lamb NZ, indicates that forestry with carbon credits is more profitable on a per hectare basis than sheep and beef farming.
Farmers can use the Government’s tree planting scheme to get a return on investment on marginal land both through tree harvesting and selling carbon through the Emissions Trading Scheme.
Generating income from trading carbon is possible within six or seven years of planting a new forest, says Peter.
Diversify and de-risk
“Investing in forestry represents an opportunity to diversify and de-risk traditional farming operations. Carbon credits offset farm emissions and can provide an alternative income stream during low periods in commodity price cycles.” The Ministry of Primary Industries’ annual afforestation grants for new forest planting are a “no brainer,” says Peter, with the $1300 per hectare grant covering typical forest establishment costs.
Previous years’ grants have been oversubscribed, and Peter says the association expects the same scenario this year.
Woodlots can be planted anywhere between five and 300ha to be eligible for the afforestation grants, but new forest owners need to give thought to access for harvesting and economies that come from scale.
Peter says neighbours getting together to plant forest blocks on adjoining property and sharing harvesting costs is one way to build better economies.
“Planting any tree anywhere is not economic. Scale in forestry is important. Forests would ideally be planted in concentrated catchments within 100km of processing facilities – so more forests need to be planted in the southern North Island, Northland and east coast of the North Island.”
Planting needed now
Crown Forestry has announced it wants to work with private landowners to develop plantation forests on land not planted as forest previously, providing another way for farmers to get involved in forestry, says Peter.
The Government’s commitment to increasing the country’s forest estate is a positive move, but Peter says the association wants to see more detail about how the plan is going to be achieved.
“To meet our Paris Accord [global agreement on climate change] to reduce greenhouse gas emissions by 30 per cent below 2005 levels by 2030, planting needs to start as soon as possible to allow carbon to accumulate.”
The ETS is a significant factor affecting the profitability of modern forestry operations, and an important part of how NZ will meet its commitments under the Accord, and the FOA wants to see agriculture added to the ETS because it would level the playing field between forestry and farming, says Peter. “The way the ETS scheme is structured places fewer obligations on farmers than forest owners. Removing this disparity would help landowners better understand the true return on investing in forestry and farming.”